Data Center Systems (DCS) filed suit against Computer Network Technology Corporation (CNT) alleging fraud related to a three-year agreement concerning data center connectivity products. CNT is now known as McDATA Services Corporation, a wholly-owned subsidiary of Brocade Communication Systems. In the 2003 agreement, DCS acquired the rights to two fiber optic product lines. CNT agreed to promote, market and sell both product lines and not to compete with DCS during the entire three-year term of the agreement.
Filed in March 2006, the Data Center Systems lawsuit charged that CNT never intended to perform its obligations under the agreement. After eight days of trial, the jury concurred, finding by clear and convincing evidence that CNT had committed fraud and that DCS suffered lost profits of $12.5 million. Data Center Systems is a leading designer, manufacturer and installer of fiber optic structured cabling solutions for data centers all over the world. Prior to its acquisition in 2005 by McDATA Corporation, CNT sold switches, gateways and storage management software for large computer networks. McDATA Corporation was acquired by Brocade Communication Systems of San Jose, California, in 2007.